Opportunity Is Seen For CUs In Gift Cards
A new consumer survey suggests there is strong potential for financial institutions in gift card sales. The survey, conducted by Collective Dynamics probed for gift card-related perceptions, including frequency of usage, frequency of purchase, the most common retailer type where gift cards are used, and more.
"Our research uncovered valuable information about consumers' understanding and preferences related to bank-issued gift cards," said Rich Kisida, Director of Market Research for Collective Dynamics. "Issues such as the level of awareness consumers have about the availability of bank-issued gift cards, for example, are important factors for banks to understand as they evaluate their product plans for the gift card marketplace."
"Despite the current overwhelming dominance of store-issued gift cards, certain features of bank-issued gift cards were found to be more popular by the survey respondents-card personalization, for example," noted Collective Dynamics' Dave Lott. "I believe that financial institutions considering launching or re-evaluating a gift card product will find valuable information in this report to help them determine how to position and price their gift card program."
Some larger banks have withdrawn their consumer gift card programs, most notably Bank of America, but there are still opportunities in the gift card marketplace for financial institutions, according to the company.
"The gift card market is estimated at more than $40 billion annually, yet bank-issued gift cards represent only about 5% of that market. With smart strategies, the gift card line of business could still represent high potential for banks and credit unions," said Steve White, founder of Collective Dynamics.
* The distribution of usage for a Bank Gift Card is quite different from Store Gift Cards.
* 32% of the respondents who had used a bank-Issued gift card received the card as an incentive or reward.
* 84% of bank-issued gift cards are purchased in-person, compared to 61% of Store Gift Cards.
Research data was derived from a national study of 1,600 U.S. consumers conducted using online techniques.
For info: www.collectivedynamics.com